Annuity Market Imperfection, Retirement And Economic Growth

The authors study the effects of an annuity market imperfection on individual agents' labour supply and retirement decisions and on the macroeconomic growth rate in an overlapping generations model with endogenous growth. They model imperfect annuities by introducing a load factor on the interest rate faced by finitely-lived agents. The core model features age-independent wages and a constant mortality rate. In the first extension they study the implications for microeconomic decisions and macroeconomic outcomes of a hump-shaped life-cycle profile in labour productivity, whilst in the second extension they postulate a realistic mortality process.